In the first quarter of 2011, the company achieved operating income of 47 million yuan, a year-on-year increase of 15.24%; operating profit of 1.01 million yuan, a year-on-year increase of 12.04%; net profit attributable to owners of the parent company: 8.82 million yuan, an increase of 3.22%; and EPS of 0.04 yuan. Revenue is basically in line with the increase in bus sales in China. The company is a leader in the retarder industry, mainly supplying large and medium buses, with a market share of about 40%. In the first quarter, China sold a total of 101,200 buses, an increase of 13.43% over the previous year. Benefiting from the increase in bus sales, the company's revenue increased 15.245 year-on-year, which is basically in line with the increase in bus sales. We expect the sales growth rate to reach 17% in 2011, and the corresponding company's eddy-current retarder sales growth rate is about 20%. The company expects net profit attributable to owners of the parent company to increase by about -10%-30% year-on-year in the first half of 2011, and the corresponding EPS is about 0.08-0.12 yuan. Both gross margin and period expense ratio declined year over year. The company's gross margin for the first quarter was 35.78%, down 2.53 percentage points from the previous year. The fee rate for the period was 14.16%, down 2 percentage points from the previous year. Among them, the management expense ratio fell 0.3 percentage points year on year to 6.12%, the sales expenses rate fell 1.8 percentage points year on year to 8.6%, and the financial expense ratio was -0.56%, compared to -0.67% in the same period last year. The company's future focus is on truck market development and hydraulic retarder research and development. (1) The vast majority of automobile retarders in China are used by large and medium passengers, and the assembly rate of truck retarders is low. If the discussion draft “Technical Conditions for Motor Vehicle Operation Safety” submitted for review in 2010 stipulates the installation of retarders in trucks, it is expected that heavy goods and semi-trailers will become growth points in demand for automobile retarders. Currently, the company is actively developing the truck market. The company's eddy-current retarder production expansion project has been completed by 90.48%, and is expected to reach production by the end of 2011. At that time, the company's production capacity will reach 50,000 units (25,000, 20,000, and 50,000 units of bus, truck, and semi-trailer retarders respectively), which can achieve a net profit of 60.19 million yuan. (2) The company is developing hydraulic retarders to improve the product structure, mainly for high-speed, high-power vehicles such as buses over 12 meters and trucks over 40 tons. Earnings forecasts and ratings. The 2011-2013 EPS is estimated to be 0.26 yuan, 0.32 yuan, and 0.41 yuan respectively. Based on the closing price of 15.19 yuan on April 15, the corresponding dynamic PE is 58 times, 47 times, and 37 times, respectively. Due to policy uncertainty, investors are advised to pay careful attention and maintain a “neutral” investment rating for the time being. Risk warning. (1) The risk that the price of raw materials such as enameled copper wire will rise beyond expectations; (2) the risk of policy uncertainty.